Postal Service Eyes Options Beyond Layoffs and Buyouts

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The U.S. Postal Service must look for new ways to generate revenue beyond simply reducing its workforce, said lawmakers and witnesses during a House hearing on Thursday.

Employee layoffs are not the only solution to digging the agency out of debt, said Rep. Stephen Lynch, D-Mass., chairman of the House Oversight and Government Reform’s federal workforce subcommittee. “It would be a mistargeting of our problems to look at the backs of our employees.”

But Lynch expressed disappointment over the agency’s consolidation and cost-savings efforts thus far, particularly because recent buyout offers have not generated enough employee interest to reduce the Postal Service workforce.

The Postal Service is expecting a net loss of $7 billion for fiscal 2009.

Other than layoffs and buyouts, adding retail and other services could increase revenue, witnesses said. The Postal Service already has a partnership with Hallmark to sell greeting cards in 1,500 locations nationwide. USPS currently accepts passport applications, and is considering partnerships with a range of federal and state agencies to offer broader credentialing services. The subcommittee also questioned whether the agency could benefit from taking on some census functions for the 2010 decennial count.

“There’s a lot more we can do with the facilities that we have,” said Robert Bernstock, president of mailing and shipping services at the Postal Service.

The challenge, witnesses and lawmakers agreed, is to adopt new services without encroaching on those already provided by private companies. At the same time, the private sector could be the best source for creative solutions, and several committee members appealed to those with innovative ideas to help develop a business model.

Several witnesses offered foreign postal services as models for reform, citing innovation and limited political interference in their operations. While these additional freedoms are important, the Postal Service also must reflect its traditions and continue to support mail functions, said Ruth Goldway, chairwoman of the U.S. Postal Regulatory Commission. “The rationale that ‘others are doing it’ does not satisfy this criteria,” she said.

Though new revenue streams are part of the Postal Service strategy, a reduction in delivery frequency, closings and a smaller workforce still warrant consideration, witnesses said. For now, according to Goldway, there’s no agreement on the cost savings with reduced service and location closings.

“At the end of the day, we need to increase the relevance of the Postal Service,” said Rep. Jason Chaffetz, R-Utah.